The slide in the dollar versus the yen began yesterday afternoon, as dealers decided to close out their long dollar positions ahead of today’s non-farm payrolls report; this pushed the dollar to a one month low against the yen.
Despite this recent correction, the US dollar is up 16% versus the yen since Japanese prime minister Shinzo Abe pledged to aggressively devalue the yen at the of last year, in an effort to boost economic activity.
At 1.30pm (London time), the US will release the non-farm payrolls data, as well as an unemployment report, both of which will be watched carefully by traders. Economists are expecting the level of unemployment to remain the same at 7.5%, and are predicting a rise of 167,000 in the payrolls. If the level of unemployment drops we might see traders buy back into the dollar, as it could signal a tapering of quantitative easing.